The "grain crisis" spreads in Asia, from Kazakhstan to China

Kazakhstan is banning the export of wheat, and Indonesia of rice. China is not self-sufficient, but the state pays low subsidies to farmers who plant grains, discouraging innovation. India will start running out of food if the upcoming monsoon rains are not favourable.

Hong Kong (AsiaNews/Agencies) - Kazakhstan yesterday banned the export of wheat, of which it is the fifth leading seller worldwide. With similar decisions in Russia, Ukraine, and Argentina, about one-third of the world wheat market is closed. Rice prices are at a record, after Indonesia yesterday prohibited private companies from selling abroad, following the same measures taken by Vietnam, Egypt, China, Cambodia, and India.

These bans are being justified by the urgency of preserving stockpiles for domestic consumption, and of keeping domestic prices low, to avoid massive sales that would profit from higher prices abroad. Experts do not foresee significant consequences from the Indonesian ban, since it is not a leading exporter, and the immediate repercussions demonstrate the extreme worldwide agitation and the fear over growing scarcity. In 2007, Jakarta imported 1.5 million tonnes of rice, while this year, because of favourable climate conditions, it is expected to harvest 32.63 million tonnes, which surpasses expected domestic consumption of 31.45 million tonnes. Rice is an essential food for the country's 226 million inhabitants, and the government wants to accumulate stockpiles of 3 million tonnes.

The run-up in prices is explained by the decline in farmland, taken over by industries and cities and for the production of biofuels, and many observe that there is a strong increase of consumption in India and China. Vietnamese officials speak of an inflation rate of 9.2% (the highest in the region) and of strong price increases for fuel and pesticides (as high as +75%). Meanwhile, pork prices are expected to rise significantly, driven by higher costs for feed, especially wheat and soya.

But an increasing number of experts observe that global production has not diminished, and are not ruling out the possibility of speculative hoarding.

Meanwhile, India is breathing a sigh of relief, after the announcement from the department of science and technology in New Delhi that the monsoon rains, which begin in June, should be sufficient for the cultivation of rice, wheat, and food oil plants. Three-quarters of Indian farmland is without irrigation systems, and depends on the rain. The country has consumed its reserves and now has only enough food to cover demand for 12 weeks, and the rise in food prices pushed inflation to the rate of 7.41% in the last week of March.

In China, Zeng Liying, deputy director of the state grain administration, says that although production has risen to about 500 million tons, it will be insufficient for domestic consumption. Zhu Changguo, president of the Chinese cereals and oils association, expects rice production to decline. The state buys large quantities of grain from farmers, but they protest that the prices imposed are not high enough to meet the rise in production costs, and are discouraging any kind of innovation. Zhu Sixiong, a farmer in Hebei, observes that the cost of rice production grew from 6,750 yuan per hectare in 2006 to 9,000 in 2007, but the government subsidy rose by only 1,800 yuan.

In Sri Lanka, the sharp rise in wheat prices is inducing an increasing number of people to return to greater consumption of rice and legumes, a choice applauded even by the authorities. President Mahinda Rajapakse says that he is "exceedingly glad at the fall in consumption of wheat-flour based products", which has dropped by 40%, according to official data. The UN Food and Agriculture Organisation has listed Sri Lanka among the 14 countries experiencing a "food emergency" because of the rise in prices. The country, once considered "the granary of the East", now imports great quantities of grains. (PB)